Currently viewing and reading

Westell Technologies Reports $2.7 Million Fiscal 2010 Third Quarter Profit

Posted by Dana in January 28th 2010

* Fiscal third quarter consolidated revenue of $42.8 million.
* Fiscal third quarter net income of $2.7 million, or $0.04 per diluted share
* Gross margin improved to 32.2% in the quarter, compared with 25.4% in the prior-year quarter.
* Cash and cash equivalents increased by $4.1 million during the quarter to $58.1 million.
* Acquired 1.3 million shares for $1.4 million under the stock repurchase program.

Westell Technologies, Inc. (NASDAQ: WSTL), a leading provider of broadband products, outside plant telecommunications equipment and conferencing services, announced results for its fiscal third quarter ended December 31, 2009. Total revenue for the quarter was $42.8 million, down 12.2% from $48.8 million in the fiscal third quarter last year. Net income during the quarter was $2.7 million, or $0.04 per diluted share, compared to a net loss of $4.0 million, or a loss of $0.06 per diluted share, in the same period last year. Total cash and cash equivalents were $58.1 million at December 31, 2009, up $4.1 million during the quarter and up $14.2 million compared to December 31, 2008.

The Customer Networking Solutions division reported revenue of $20.5 million in the fiscal third quarter, down 19.4% compared to $25.5 million in the same quarter of last year, with the largest impact coming from lower sales of the Company’s UltraLine Series3 gateway product. UltraLine Series3 revenues were $3.8 million in the quarter, compared with $10.5 million in the fiscal third quarter last year. Revenue at the OSPlant Systems division was $12.4 million in the quarter, unchanged from the same quarter of last year. ConferencePlus revenue was $9.9 million in the quarter, down 9.8% compared to $10.9 million in the same quarter of last year.

Consolidated gross profit for the quarter increased $1.4 million, compared with the fiscal third quarter last year, as a result of improved product mix in the Customer Networking Solutions and OSPlant Systems divisions. Gross margins were 32.2% in the quarter, compared with 25.4% in the same quarter of last year, with improvement in all three divisions. Operating expenses also improved across the divisions, with total operating expenses for the quarter being $4.8 million lower than in last year’s quarter.

Two specific items had notable impacts on earnings for the fiscal third quarter. First, a tax refund contributed $767,000, or approximately $0.01 per share, to earnings. This discrete tax benefit derives from a refund of alternative minimum tax credits that the Company claimed on a tax return filed in December 2009 pursuant to stimulus provisions of the Housing and Economic Recovery Act of 2008 and the American Recovery and Reinvestment Act of 2009.

Second, the Company recorded $730,000 of additional stock-based compensation expense to correct an understatement of that expense in prior years. The correction reduced earnings by $730,000, or approximately $0.01 per share. The Company discovered in January 2010 that its third-party equity program administration software incorrectly calculated equity award forfeitures, resulting in the understatement. As stock-based compensation expense is a non-cash item, there was no impact to net cash provided by operations in any period.